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SBI funds plummet

For an AMC, which produced chart-busting returns in 1999, nothing could have been more painful than seeing all its funds at the bottom of their respective categories in 2000.

It was a year that SBI Mutual Fund and its investors are not going to forget in a hurry. For an AMC, which produced chart-busting returns in 1999, nothing could have been more painful than seeing its funds at the bottom of each category in 2000. Apart from technology heavy portfolios, some of the other big-ticket holdings of Magnum funds turned out to be a big disappointment. The AMC's open-end bond fund also hit the bottom of the deck, its performance impacted by frequent change in fund managers. Magnum Liquibond saw as many as four fund managers in 2000. The current incumbent, Pijush Das is now managing the fund since June 2000.

Take for instance, Magnum Multiplier Plus. This diversified equity fund lost over 50% in calendar 2000 as the NAV plummeted from Rs 39.23 to Rs 19.49. The fund is at the bottom of the Value Research category, which has 66 diversified equity funds. The sharp drop in the NAV has pulled down the assets from Rs 899 crore in February to mere Rs 347 crore in November. The same fund had delivered a blistering return of 220 per cent in 1999.

Or, for example the AMC's balanced fund lost over 30% in 2000 and was again placed at the bottom of the return ladder. Apart from concentrated holdings in technology stocks, the fund has had a reasonable exposure to mid-cap stocks. Some of the top holdings of the fund like Aftek Infosys, Zee and SSI suffered sharp erosion in 2000. For instance, Aftek Infosys slid by nearly 70% last year from Rs 2126 to Rs 646. The exposure to the technology sector had vaulted to 74% of the total equity exposure during the heydays of the ICE rally with the top ten stocks from the troika of software, telecom and media.

However, Magnum Balanced has now cut its holdings in the ICE stocks. "We have significantly reduced our exposure to the the infotech sector over the past six months. Our portfolio today is reasonably diversified with exposure to stocks like Reliance and Larsen & Toubro, Pharma stocks like Cipla and Dr Reddys, Content providers like Mukta Arts and stocks like Vikas WSP. Six out of the top ten stocks in the portfolio as of date are from the non-TMT sectors. The total exposure to TMT in our portfolio as on date would be around 40%,'' says Sandip Sabharwal, fund manager, Magnum Balanced.

Among other top losers in their respective categories are the three sectoral funds of Magnum Pharma, Magnum IT and Magnum FMCG. Among the sectoral funds, Magnum FMCG has been particularly badly bruised vis-à-vis its peers. While the fund has lost over 34%, its peers lost only around 15% in 2000. Some of the fund's top holdings like Vikas WSP, ISPL, Mirza Tanners and Dabur were battered during the year. The sharp erosion in NAV is all the more amazing since the fund had a substantial exposure to cash across three different time periods (April, July and October) for which complete portfolios were available. The average cash holding was a whopping 27% for the three months.

So, what's in store for the AMC's investors in the new-year? For one, the portfolios of SBI equity and balanced funds have now become more diversified, with the holdings in technology stocks pruned from over 70% in March to less than 50% in November. Though this still has the potential to further rock the boat, it remains to be seen whether SBI fund managers will further diversify their portfolios for stable returns.

The Decline of SBI Heavyweights
    30/12/1999  29/12/2000  
   (in Rs) (in Rs) 
  Zee Telefilms 1093 329 -69.90
  Aftek Infosys 2126 646 -69.61
  ISPL 1679.7 691.7 -58.82
  Mirza Tanners 161 70.75 -56.06
  Navneet Publications 338 158 -53.25
  Vikas WSP 1020 624 -38.82
  SSI 2207 1431 -35.16
  Ramco Systems* 1129 800 -29.14
  Infosys 7258 5705 -21.40
* As on October 9, 2000